Regime de Retraite Complementaire
I think most people would agree that pensions are pretty important, and anyone able to should contribute to a pension scheme of some sort – government, private, whatever seems most appropriate and sensible.
So I was perfectly happy to see that part of my obligatory social contributions goes to something called ‘retraite complementaire’. No problem at all, and presumably most people would agree with the principle, if not the amounts involved.
I sent off the cheque, along with a letter to ask how the amount was calculated and what period it related to – all they had sent was a letter saying I had to pay. It was almost with pleasure that I started reading through the information pack they had kindly sent along with the bill. Until I discovered the following:
- To receive full pension entitlement it is necessary to pay for 40 years, before your 65th birthday. Sounds reasonable.
- If you don’t pay a full 40 years contributions, the pension paid will be reduced according to the number of years of contriibutions actually paid. Again, no problem, until reading the next paragraph…
- The reduction in the pension paid will be 5% for each year when no contributions were paid. So if you pay less than 20 years you won’t get anything.
By coincidence, I made the first payment in the week of my 45th birthday. Which a moment of calculation shows to be the worst possible time to start paying – if I continue to work and contribute to the scheme for the next 20 years, until my 65th birthday, I will have the privelege of paying the most contributions possible, and receiving absolutely no benefit.
Sounds unlikely? Well I’ve written to them to confirm the situation. But meanwhile I know of other people who have been told that yes, they do have to pay pension contributions, although there is no possibility of ever receiving a benefit.
And when we talk to our accountant about pensions, although she is a bit unclear, she also suggests that we should make ‘alternative arrangements’ because we probably won’t actually receive anything in return for our payments.
Keep your fingers crossed that I can tack a happy ending onto this post in due course!
Is there any way to avoid paying if it is predictable that one would not receive any benefit? I am an American ‘of a certain age’ (not that old but I’ll not be collecting – c’est sûr!) just now preparing to pay into the French system and am wondering if this part of the fees can be waived…although I suspect I already know the answer!
Thanks for bringing this up for clarification!
We haven’t had a response yet. I had a talk with URSSAF yesterday and they seemed in principle to think I could avoid it, but someone else told me I couldn’t. Keep an eye on this thread in a week or two when hopefully we will have more news.
Well think a different way. You are paying Retraite because french people have a commun big pot (caisse) they use for their national pension. Every body working have to pay. It doesn’t matter if you start late.
This is named solidarité to each other. So you are participating to that and this is really a big part of being french. Congratulation.
Regarding the retraite complementaire you will get some points for it and you should be able to get back some momey from it based on the price of the point when you will be in age to retire.
Enjoy
Bob
Bob, I’m all for solidarity and for everyone paying into a communal pension, the problem is that it looks like I will not have a future entitlement to ‘retraite complementaire’ if I pay in for less than 20 years (according to the CIPAV documentation – they have failed to respond to my question).
In my opinion both ‘solidarity’ and ‘pension contributions’ are a two-way thing – I pay now to help out current pensioners, on the clear understanding that someone else will do the same for me in due course – if they won’t, then I need to invest my own money now to pepare for my own future. That was the reason for the complaining!
Cheers
My husband has been like you paying CIPAV and thought he will not
get any benefit from it.
He passed away last september 2008. Widow with a 16 years old CIPAV is giving us a pension (rente de survie) 605 euros until I reach 60
and also the same for my daughter 605 euros up to 25 years old if she continues studying. We got as well a capital deces of 71000 euros. My husband was with SICAV for 3 years and has payed on top of the pension complementaire the SICAV life insurance. He likes you thought he was not going to benefite from it. It is very true.
Have just stmbled across your blog while searching for information on this exact question. Have you made any progress towards getting a definitive answer on what entitlements might be for people like us who have no chance of ever doing 160 trimestres in France before retirement but are still pouring money into the system?
Failing this have you come across any advice for minimising or avoiding this apparently wasted contribution?
I’m having a read thru your other blog entries and chuckling at some of the all too familiar frustrations of daily life here.
Dave, I never got anything like a proper explanation from CIPAV, and I now operate as a SARL (limited company) and am no longer part of the dreaded CIPAV system, and assume the money I already paid them is lost forever. I’d love to hear if there is a good answer to your question!
Thanks for the reply. As far as I can tell there is little hope of getting anything back from CIPAV with less than 20 years work history and beyond that you only get a fraction because of the proration applied e.g. 50% after 30 years, 75% after 35 years. I too am now looking at alternatives lke SARL or other structures too minimise the lost investments made in the french social system.
PD. I spoke to my accountant who said that as a profession liberale this contribution is compulsory so the only way to avoid/reduce it is to move to a system whereby your taxable income is lower.
Hi, I think it is still avoided by being paid only in dividends from a SARL, which are only subject to the usual 12% ‘social contributions’ (CSG etc) (plus tax of course) – or is your accountant suggesting otherwise?
Yes you are correct – moving to a SARL and splitting revenue into salary and eventually dividends seems the most common approach. I’m all for paying my fair share of the social system as a cost of living here but the pension system is really beyond a joke for migrants.
I may be wrong, but my understanding is that all work history and contributions in any EU country are summed up and taken into consideration when the pension is determined (at age of 65).